American Economic Review Vol. 104 No. 5 2014

How Risky Are Recessions for Top Earners?

Fatih Guvenen¹; Greg Kaplan²; Jae Song³

¹ University of Minnesota, 4-101 Hanson Hall, University of Minnesota, 1925 South 4th Street, Minneapolis, MN, 55455, and NBER (e-mail: ) · ² Princeton University, Department of Economics, Fisher Hall, Princeton, NJ 08544, and NBER (e-mail: ) · ³ US Social Security Administration, Division of Economic Research, Washington, DC 20254 (e-mail: )

Abstract

How sensitive to business cycles are the earnings of top earners? And, how does the business cycle sensitivity of top earners vary by industry? We use a confidential dataset on earnings histories of US males from the Social Security Administration. On average, individuals in the top 1 percent of the earnings distribution are slightly more cyclical than the population average. But there are large differences across sectors; top earners in Finance, Insurance, and Real Estate (FIRE) and Construction face substantial business cycle volatility, whereas those in Services (who make up 40 percent of individuals in the top 1 percent) have earnings that are less cyclical than the average worker.

DOI

10.1257/aer.104.5.148

Volume

104

Issue

5

Pages

148-153

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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